MANAGING BUSINESS ETHICS Introduction Part 1 Referencing Chapters 1 Trevino & Nelson, Managing Business Ethics. NY: Wiley, 1999.

Learning Objectives What is “business ethics?” Why do so many people think “business ethics” is an oxymoron? (Why are people cynical and what can we do about it?) Is business ethics a fad or an ‘afterthought’? Can business ethics be taught?

What is Ethics ? Ethics can be understood as sets of formal and informal standards of conduct that people use to guide their behavior. These standards are based in part on principles derived from core values such as honesty, respect and trust. Ethics Resource Center

So. . .What is Business Ethics ? The principles, norms and standards of conduct governing an individual or a group. Trevino & Nelson, Managing Business Ethics. NY: Wiley, 1999. P.4

Ethics Examples: The "Six Pillars of Character" by The Josephson Institute of Ethics Trustworthiness: honesty, integrity, promise-keeping, loyalty Respect: autonomy, privacy, dignity, courtesy, tolerance, acceptance Responsibility: accountability, pursuit of excellence Caring: compassion, consideration, giving, sharing, kindness, loving Justice and fairness: procedural fairness, impartiality, consistency, equity, equality, due process Civic virtue and citizenship: law abiding, community service, protection of environment

“Ethical Dilemmas” . . . . . . . . . . . . . . . . . . . . . . a textbook definition Situations concerning right and wrong where values are in conflict. Trevino & Nelson, Managing Business Ethics. NY: Wiley, 1999. P.4

An Ethical Dilemma . . . . . . . . .arises in a situation when each alternative choice or behavior is undesirable because of potentially harmful ethical consequences. Right or wrong cannot be clearly identified. (Daft & Marcic, p.137)

Are we cynical about ethics? But Sir, you said to install video monitors where ever we suspected unethical activity.

A Workplace Perspective on Cynicism “What values should we live by? What are we here to do? Modern workplaces offer little help in finding answers to these perplexing queries. As a result, too many of us drift along with little sense of direction and without a moral compass to guide us through the ethically slippery world of work. This deepens our discouragement about work and, ultimately, about life. You probably know people who are situationally smart but spiritually bankrupt. Lee G. Bolman & Terence E. Deal, Escape from Cluelessness: A Guide for the Organizationally Challenged. American Management Association, 2000.

The Management Challenge Jeffrey M The Management Challenge Jeffrey M. Kaplan, The Conference Board Program Director. "Many companies proclaim the creation or expansion of business ethics and compliance programs with great fanfare and the best of intentions. But often businesses are unable to maintain the credibility of their programs over the long run, with devastating consequences for employees, shareholders, and others.”

Why are managers cynical about Business Ethics? General Corporate Values & Goals Business preoccupation with gain Perception that only results are important Competition rather than collaboration Corporate Response to Ethical Issues Generally accepted unethical practices in certain industries. Acceptance of unethical behavior Ineffective enforcement of ethics codes Failure to reinforce ethical behavior

How common is misconduct at work. About one in every three employees observe misconduct at work.

5 types of misconduct observed most frequently include: Lying; Withholding needed information; Abusive or intimidating behavior toward employees; Mis-reporting actual time or hours worked; and Discrimination.

The Good News: Survey of Workplace Ethics found that employee perceptions and key ethics outcomes are more positive when: Organizations have ethics programs in place, Employees see ethical values like honesty, respect and trust applied frequently at work, and Organizational leaders and supervisors are seen as modeling ethical behavior. 2000 National Business Ethics Survey

Substantially improved society Is Business Ethics a Fad or an Afterthought’? Results from Attention to business ethics ! Substantially improved society Helps maintain a moral course in turbulent times Cultivates strong teamwork & productivity Support employee growth and meaning Helps ensure that policies are legal. Helps avoid criminal acts “of omission” & can lower fines Helps manage values associated with quality management, strategic planning and diversity management Promotes a strong public image Cumulative Benefits – the “bottom line” Complete Guide to Ethics Management: Ethics Toolkit for Managers http://www.mapnp.org/library/ethics/ethxgde.htm#anchor33077

Can Business Ethics Be Taught in College Programs? Felix Rohatyn - “No, not past the age of 10” Lester Thurow - “Not unless students have already learned ethics from families, clergy, previous school or employers”

Should Employees Know the Difference between Right & Wrong? “Bad Apples” Individuals of good character should be able to choose well without special training. “Bad Barrels” Good character doesn’t prepare individuals to deal with very special ethical problems unique to their particular occupation or organization.

Factors that Affect Individual Ethical Decision-Making Behavior Characteristics Cognitive Bias MORAL JUDGMENT Stages of Moral Development AWARENESS Ethical Dilemma Ethical/ Unethical Behavior Structural Characteristics of Organization Organizational Culture Issue Intensity